nep-cna New Economics Papers
on China
Issue of 2020‒11‒16
nine papers chosen by
Zheng Fang
Ohio State University

  1. Can I live with you after I retire? Retirement, old age support, and internal migration of older adults in China By Simiao Chen; Zhangfeng Jin; Klaus Prettner
  2. Digital labour platforms and labour protection in China By Zhou, Irene.
  3. Industrial Clusters, Networks and Resilience to the Covid-19 Shock in China By Ruochen Dai; Dilip Mookherjee; Yingyue Quan; Xiaobo Zhang
  4. One good turn deserves another? Evidence from China trade and aid policy By Camelia Turcu; Yunzhi Zhang
  5. Banking across borders: Are Chinese banks different? By Eugenio Cerutti; Catherine Koch; Swapan-Kumar Pradhan
  6. Inequality and Support for Government Responses to COVID-19 By Dang, Hai-Anh; Malesky, Edmund; Nguyen, Cuong Viet
  7. Emissions Trading Schemes and Directed Technological Change: Evidence from China By Tian, Ruijie
  8. Measuring Business-Level Expectations and Uncertainty: Survey Evidence and the COVID-19 Pandemic By CHEN Cheng; SENGA Tatsuro; ZHANG Hongyong
  9. The impact of Guanxi on the selection of Logistics Service Providers in China By Kern, Johannes

  1. By: Simiao Chen (Heidelberg Institute of Global Health, Heidelberg University); Zhangfeng Jin (College of Economics, Zhejiang University); Klaus Prettner (Department of Economics, Vienna University of Economics and Business)
    Abstract: This study examines the causal impact of retirement on migration decisions. Using a regression discontinuity (RD) design approach, combined with a nationally representative sample of 228,855 Chinese older adults, we find that retirement increases the probability of migration by 12.9 p.p. (an 80% increase in migration). Approximately 38% of the total migration effects can be attributed to inter-temporal substitution. Retirement-induced migrants are lower-educated, have restricted access to social security, and come from origins with high living costs. Relying on old age support from adult children in migration is a likely mechanism. These findings are consistent with a simple theoretical model of migration for older adults.
    Keywords: Retirement, Internal migration, Old age support, China, Regression discontinuity design
    JEL: J14 J26 J61
    Date: 2020–10
  2. By: Zhou, Irene.
    Abstract: The growth of digital labour platforms worldwide creates both opportunities and challenges to the world of work as well as the traditional approaches of regulating work and setting minimum stand- ards. This paper explores the implications of the digital labour platforms for labour regulation in China and the potential applicability of existing laws and regulations to platform work. It begins by defining platform work and reviewing its scope, composition and characteristics, with a focus on working con- ditions in China, followed by analysis on how labour regulation is complicated by the platform business models. In analysing the existing regulatory frameworks, the regulatory gaps become apparent. The paper concludes with policy options based on relevant international standards and the approaches to regulating platforms in other countries and the Chinese context, including its economic and policy environment as well as its industrial relations system.
    Date: 2020
  3. By: Ruochen Dai; Dilip Mookherjee; Yingyue Quan; Xiaobo Zhang
    Abstract: We examine how exposure of Chinese firms to the Covid-19 shock varied with a cluster index (measuring spatial agglomeration of firms in related industries) at the county level. Two data sources are used: entry flows of newly registered firms in the entire country, and an entrepreneur survey regarding operation of existing firms. Both show greater resilience in counties with a higher cluster index, after controlling for industry dummies and local infection rates, besides county and time dummies in the entry data. Reliance of clusters on informal entrepreneur hometown networks and closer proximity to suppliers and customers help explain these findings.
    JEL: L25 O14
    Date: 2020–10
  4. By: Camelia Turcu (Université d’Orléans, CNRS, LEO, FRE 2014); Yunzhi Zhang
    Abstract: In this paper we study the impact of China’s foreign aid on exports. To do this, we use a sample of 159 countries during the period 2000-2014 and employ a gravity model with GDP-weighted multilateral resistance terms. We fi nd that the return on Chinese exports of every dollar spent on foreign aid is around 0.194$-0.4115$, at aggregate level and at HS6 product level, of 0.00004$ on average, for the whole period. Our results also indicate that Chinese foreign aid initiates trade of new product varieties with foreign partners and strengthens the trade in goods that are already exchanged; foreign aid could also enhance trade in existing geographical markets. However, it does not help to create new market shares. Furthermore, it fosters a stronger South-South integration as it encourages mainly the trade relations with developing and emerging countries
    Keywords: Emerging donor, aid-trade nexus, trade margin
    JEL: F P
    Date: 2019
  5. By: Eugenio Cerutti; Catherine Koch; Swapan-Kumar Pradhan
    Abstract: We explore the global footprint of Chinese banks and compare it with that of other bank nationalities. Chinese banks have become the largest cross-border creditors for almost half of all emerging market and developing economies (EMDEs). Their global reach resembles that of banks from advanced economies (AEs). We take a nationality approach as international banks, and Chinese banks in particular, grant a substantial share of their cross-border loans from affiliates located abroad. But differences remain. Using a gravity model with a novel measure of distance capturing the role of foreign affiliates across all bank nationalities, we find that larger distances deter crossborder bank lending to EMDEs more than to AEs. For Chinese banks, however, distance deters lending to EMDEs less than for peer EMDE banks. We show that for all banks combined, bilateral economic interactions like trade, FDI and portfolio investment, positively correlate with lending. Chinese banks' lending to EMDEs also strongly correlates with trade, but not with FDI and, unlike other banks, it correlates negatively with portfolio investment.
    Keywords: cross-border banking, Chinese banks, trade, FDI, gravity model
    JEL: F34 F36 F65 G2
    Date: 2020–10
  6. By: Dang, Hai-Anh (World Bank); Malesky, Edmund (Duke University); Nguyen, Cuong Viet (National Economics University Vietnam)
    Abstract: Despite a rich literature studying the impact of inequality on policy outcomes, there has been limited effort to bring these insights into the debates about comparative support for government responses to the COVID-19 pandemic. We fill in this gap by analyzing rich survey data from six countries spanning different income levels and geographical locations — China, Italy, Japan, South Korea, the United Kingdom, and the United States. We find that poorer individuals are less supportive of government responses, and that poorest individuals are least supportive. Furthermore, poorer individuals residing in more economically unequal countries offer even less government support. We also find that both economic and non-economic factors could affect the poor's decisions to support stringent government policies. These findings suggest that greater transfers to the poor may ameliorate their resistance, increase support for strict policies, and may reduce the potential deepening of social inequalities caused by the pandemic.
    Keywords: COVID-19, inequality, income quintiles, poverty
    JEL: D0 H0 I3 O1
    Date: 2020–10
  7. By: Tian, Ruijie (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper examines the impact of carbon emissions trading schemes (ETS) on technical change proxied by the number of green patents in the context of the pilot ETS in China. I find a small increase of 0.16 patents per firm and year. A 10 percent increase in carbon prices increases green patents by 2 percent. The strongest effects are for the two regions in the upper range of carbon prices and for more productive firms. However, there are contrasting patterns at the extensive and intensive margins of green innovation: the pilot ETS reduces entry into green innovative activities but increases levels of innovating for firms that were innovative before they were regulated by ETS, especially for the more productive firms. This indicates that an important policy challenge is to encourage the firms covered by ETS to start innovation in green technologies; this applies particularly to the larger and more productive firms.
    Keywords: Carbon Pricing; Directed Technological Change; Innovation; Heterogeneous Firms.
    JEL: O33 O44 Q54 Q55
    Date: 2020–11
  8. By: CHEN Cheng; SENGA Tatsuro; ZHANG Hongyong
    Abstract: Utilizing a unique firm-level survey in Japan which contains 5-bin forecasts for micro-and macro-level variables and information on firm sentiment, we document three interesting findings. First, firm-level subjective uncertainty (i.e., variance of forecasts) is highly positively related to firm growth volatility and negatively affects firm hiring and investment decisions. This is true even after controlling for past and expected firm sales growth. Second, micro-level uncertainty (i.e., variance of forecasts of firm sales) is highly positively related to macro-level uncertainty (i.e., variance in forecasts of GDP growth rate and the exchange rate). Finally, roughly 20% of firms report that they are not using expected average sales and profits as the base for investment and hiring decisions (i.e., either pessimistic or optimistic). Firms that face higher uncertainty are more likely to be optimistic and optimism positively affects firm hiring decision. In addition, the sudden escalation of the COVID-19 pandemic in January 2020 led to a substantial increase in firms' subjective uncertainty. This effect is especially large for Japanese firms that have direct exposure to China through supply chains and foreign direct investment.
    Date: 2020–10
  9. By: Kern, Johannes
    Abstract: Background. By employing dedicated Logistics Service Providers (LSPs), companies can focus on their core competencies, reduce logistics costs, and have specialized logistics expertise available. However, many such outsourcing arrangements fall short of expectations as little attention is given to interpersonal connections between those who manage organizational interfaces (boundary spanners). Personal relationships are especially important in the Chinese culture, where business practices revolve around special relationships called Guanxi. Although the Guanxi phenomenon has been investigated from various angles and logistics outsourcing is considered a key topic in Supply Chain Management (SCM) research, so far, the literature overlooked the impact of Guanxi on the LSP selection process. Aims. This study aims to answers the overriding research question “How does Guanxi impact the selection of Logistics Service Providers in China now and in the future?”. Methods. A multi-tiered research process with qualitative expert interviews, a quantitative survey, and a Delphi study was employed. To identify possible impacts of Guanxi on the selection of LSPs in China, 22 qualitative interviews with experts working for LSPs and automotive Tier 1 suppliers were conducted. The resulting interview transcripts were qualitatively analyzed using the approach proposed by Meuser and Nagel. To verify the findings, a survey instrument was developed and administered online among supply chain management experts working for LSPs and companies in the automotive industry. This quantitative study was completed 194 times by participants from 17 countries, mainly China and Germany. The collected data was analyzed using various descriptive and multivariate statistical methods. Then, to forecast how the Guanxi influence will develop in the future and which factors will impact it, a Delphi study following Schmidt’s ranking type approach was conducted. It was administered and analyzed across four panels among 57 experts from LSPs and companies in the automotive industry in China. Results. Eight support possibilities, ways how the buying center of a firm can support an LSP along the stages of the selection process, and ten contingency factors, factors that may alter the support possibilities, were identified in the explorative study. In the confirmatory study, contingency factors ranked as highest impacting the selection process were selection process structuredness, project volume, and number of decision makers. It could be confirmed that the sex of the boundary spanners does not influence the impact of personal relationships on the LSP selection process, that the influence of personal relationships on the LSP selection process is lower in Western cultures compared to China, that at multinational companies, the influence of personal relationships on the LSP selection process is lower than in domestic companies, that at large companies, the influence of personal relationships on the LSP selection process is lower than in small and medium-sized companies, and that LSPs perceive the influence of personal relationships on the LSP selection process higher than buying firms. Support possibilities most frequently occurring in practice are that a buying center shares information about an upcoming project before the official start [of a tender], that a buying center evaluates the bidder’s quality more positively and that the buying center considers a bidder as a possible bidder. The Delphi study led to the identification of 31 factors influencing the future impact of Guanxi on the LSP selection process. Common themes were a strengthening of compliance, the development and digital transformation of the supply chain function as well as wide-ranging market shifts. This indicates that the Guanxi influence will rather decrease in the future and develop into a different form. Conclusions. As one of the first comprehensive investigations into the workings of Guanxi in SCM on a micro level, the studies demonstrated how Guanxi impacts the selection of LSPs in China. The findings extend the literature about buyer-supplier relationships during the procurement of third-party logistics services, where it could be shown that personal relationships can positively impact a buyer’s quality evaluation and lead to an information advantage for service providers. Also, a noteworthy contribution to the existing knowledge about contingency factors was made. Recommendations for practitioners include, above all, that firms should acknowledge that Guanxi relationships have certain effects on the selection of LSPs. On the buying firm side, this allows for deliberate decision making regarding the mitigation of such effects or the purposeful usage. LSPs could use Guanxi strategically to benefit from its business enhancing effects and seize the chance of the changing market environment where Guanxi develops into a form more compliant with international regulations.
    Date: 2020–10–10

This nep-cna issue is ©2020 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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